Consumer IQ

Why Are Hearing Aids So Expensive?

Why are Hearing Aids So Expensive? :: Mint.com/blog

This column is about an expensive product nobody wants but most of us will need sooner or later.

As a person with good hearing—for now—I’d never given hearing aids any thought until my friend Caroline, who wears hearing aids, asked me some simple questions:

Why are hearing aids so expensive? Why aren’t they covered by insurance? And why don’t they ever get any cheaper, while computers and cell phones are constantly getting cheaper?

At least, they sounded simple. Finding the answers took a lot more digging than I anticipated.

Even if you can hear fine, read on: I’m willing to bet someone in your family needs hearing aids now and doesn’t have them. And your ears won’t be young forever.

Now hear this

Let’s look at the numbers. According to recent research by Dr. Frank Lin at Johns Hopkins, 48 million Americans suffer from hearing loss in at least one ear.

Most of those affected are elderly. The risk of hearing loss doubles with each decade you live. Over 80% of people over 80 have it.

People with good hearing tend to underestimate how much even minor hearing loss affects a sufferer’s ability to understand and communicate, especially in situations with multiple speakers or background noise.

Hearing loss is strongly correlated with social isolation, which is a good predictor of all sorts of bad health outcomes.

Fortunately, today’s hearing aids are great. They’re high-powered computers worn in or behind the ear.

They’re tuned to the patient’s specific pattern of hearing loss, and contain directional microphones to help block out background noise. They’ll never be as good as normal hearing but get better every year.

Unfortunately, “only about 20% of those who can benefit from a hearing aid have them,” says Dr. James DeCaro, director of the Center on Access Technology at the National Technical Institute for the Deaf.

(This would be a good time to note that hearing loss is different from Deafness, which is a profound degree of hearing loss that brings with it unique challenges and, for many people, community benefits.)

So why don’t people who need hearing aids get them? Two main reasons:

Stigma. As a society, we associate hearing impairment with stupidity and associate hearing aids with old people who are hard to deal with. These attitudes are common, and easy to fall into, and unfair.

Cost. Discreet, top-quality hearing aids, molded to your ear canal, tuned to your hearing loss, and outfitted with the latest digital technology, cost up to $3000. Per ear. 

In most states, adult hearing aids aren’t covered by insurance, and states that do cover them never pay for more than a fraction of the cost of the best models.

Worse yet, hearing aids have to be replaced every three to five years and are easily lost or broken.

Ear buds

Electronic devices go through a predictable price cycle. The first release is expensive, often clunky, and for early adopters only.

The first iPod had a physical hard disk inside, worked only with the Mac, had no wireless networking, held 1000 songs, and cost $400. I won’t insult your intelligence by describing today’s iPod models.

Like music players, the best hearing aids keep getting better. But they also keep getting more expensive. Why? In economic terms, they suffer from cost disease. (Yes, this is a real term. I didn’t make it up.)

Prices go down when we figure out a way to make goods and services more productively. If Apple can make more iPods with the same amount of human labor, they can sell iPods at lower prices.

Some industries, however, are resistant to productivity gains.

The classic example, given in the paper that coined the term “cost disease,” is string quartets (if you play them faster or with fewer musicians, it’s really not the same), but other examples include dentistry and college education, though this may be changing with the advent of online open courses. We’ll see.

But wait a minute. If we can make iPods faster and more cheaply, why can’t we do the same with hearing aids, which are also small computers?

We can, but most of the cost of the hearing aid isn’t in the actual device.

It’s the rest of the process: a professional audiologist gives you a hearing test and produces an audiogram (kind of like your eyeglass prescription, but for ears), takes molds of your ear canals, fits and adjusts the devices, and readjusts them as needed.

We’re talking hours of work by skilled professionals, and that means cash money.

Some retailers—particularly Costco—have shaved hundreds or thousands of dollars off the price of fitted hearing aids through high volume sales.

Even at Costco, however, a pair of in-ear devices costs up to $3000.

Get fit?

Notice I keep talking about custom-fitted hearing aids.

Everyone agrees that these are the best hearing aids you can get, and are the only appropriate devices for some people with moderate to severe hearing loss.

That doesn’t mean they’re necessary for every patient, however. “Many consumers cannot afford or are interested in the gold standard, just as not everyone is interested in, or can afford, a Ferrari,” says DeCaro.

Take away the custom-fitting process, and you have something like a hearing aid crossed with a pair of off-the-shelf earbuds.

In place of the custom ear canal fit, the hearing aid comes with a set of rubber tips in different sizes. The hearing aid is still custom-programmed according to the patient’s audiogram.

One company that sells this type of hearing aid is Audicus. Their top-of-the-line in-ear model is $1300 per pair.

“We wanted to do was focus on technology that was far less medical or scary,” says Audicus CEO Patrick Freuler. “It’s really more of a consumer electronics product than anything else.”

As with hearing aids from other manufacturers, Audicus’s products offer optional Bluetooth for connecting wireless to a phone or music player. They’re almost…cool.

Unfortunately, buying hearing aids through a channel other than a professional audiologist leaves patients vulnerable to scams.

Plenty of companies target the elderly with ads or mall stands hawking cheap so-called hearing aids that are actually just amplifiers. They may help you hear the TV but little else.

How do people sort out the legitimate hearing aids from the junk?

“I think they have to exercise the same kind of caution you would when buying anything over the internet,” says Dr. Diana Bender, president of the Hearing Loss Association of America (HLAA), an advocacy group with the delightful domain name of shhh.org.

“These would include things such as avoiding vendors whose claims seem too good to be true and being sure you understand the terms of the warranty,” she says.

“A hearing aid is not like eyeglasses,” adds Bender, “so you can’t purchase one and think you will now be able to hear normally.”

She continues, “Being able to work with an audiologist to fine tune the hearing aid and help you adjust to it is a definite benefit, especially for a first time hearing aid purchaser.”

Who pays?

So how are you going to pay for that audiologist-fitted hearing aid?

Not, in most cases, through insurance. Health insurance typically covers only the hearing test. Most states don’t require insurers to cover hearing aids at all.

New Hampshire, one of the more generous states, covers $1500 per ear, once every five years. (The HLAA maintains a list of coverage by state.)

And the Affordable Care Act doesn’t affect hearing aid coverage.

Why?

I looked into it, and I just can’t figure it out. Because hearing loss is so common and so expensive to treat, private insurance companies can’t make money insuring it.

But that doesn’t explain why Medicare doesn’t cover hearing aids, and it doesn’t explain why insurance companies cover other expensive assistive devices like motorized carts.

Let’s go back to Caroline’s original question.

Will custom-fitted hearing aids get cheaper or more subsidized any time soon?

It’s unlikely. In the meantime, the cheapest place to get a pair of them is at Costco, which employs professional audiologists.

What about alternatives?

Custom-fitted devices will always be the best and most expensive.

But challengers like Audicus’s products are getting better and better, and will work well for many people with mild to moderate hearing loss, especially people with prior experience using a hearing aid.

Matthew Amster-Burton is a personal finance columnist at Mint.com. Find him on Twitter @Mint_Mamster.